Budgeting is a rule of personal finance 101.

I know they are not popular, but I am a huge fan of budgets.

Well, of S.A.V.E. Budgets.

In other words, I love budgets that are well thought through, based on your values, and designed for flexibility.

I teach and preach them all the time.

Having said that, I understand that resistance doesn’t abate easily.

You might be wondering, “Do I really need a budget?”

Everyone wants to be the exception to the rule.

In this video, find out if you are exempt from needing a budget.

TRANSCRIPT:

As much as I believe in them, I understand that budgets are not for everyone.

I almost can’t believe I would say that because I think that most everyone must, not even should, but must have a budget if they want any kind of control over their money. Without a budget and a way to make sure that you’re staying on budget, your money controls you. I believe it’s why the majority of Americans live paycheck to paycheck and carry credit card debt.

With that said, not everyone has to have a budget to remain in control. If I’m being honest, there are some years that I have gone without a budget, and all hell did not break loose. I didn’t overspend, go into debt, and I pretty much stayed on track with saving and investing. I think that most people, a solid 80% of Americans, require a budget (or spending plan if you prefer that term) to maintain financial fitness.

So at this point, you want to know if you are among the 1 in 5 people who does not need a budget. In this video, you’ll find out. I’ll go through the qualities and characteristics of people who do not need a budget in order to maintain their financial fitness.

Let’s remember where budgeting fits into financial fitness by quickly reviewing the 5 financially fit questions that you answer about last month to know if you’re financially fit.

Question 1 is do you know how much money came in, question 2 is do you know how much money went out, question 3 is do you know that more came in than went out, question 4 is where did all your money go, and question 5, which is most relevant to the issue at hand, is did your money go where you intended it to go? Did you spend your money according to your values? Are you satisfied with where your money went?

A budget outlines how you want to spend your money in order to be satisfied with where it went because it’s a road map for where you intended it to go.

So if you can trust yourself to spend your money according to your values, not ego, and so you know you’ll be satisfied with where your money went, then you don’t need a budget. This means that you are spending money in proportion to what’s important to you, without spending excessively in any category.

Further, it means that you do not go into debt. So if you have debt, you need a budget. Besides not going into debt, you need to have savings and contribute to it monthly. If you’re going without a budget, it means you already have a fully funded emergency savings account.

Please be sure to catch my video on how much you need in your emergency savings account because it varies by person. But for an absolute minimum, I’d recommend $25K in an emergency savings – again that’s at a minimum.

Besides having the emergency savings fund filled, you need to know that you’re continuing to save a significant portion of your income for other goals like investing, buying a car, traveling, buying a house, starting a business, and maintaining things like cars, homes, and other items that require ongoing maintenance.

If you find that you can comfortably pay rent or a mortgage and all the rest of your monthly expenses, without going into debt and while saving each month, you might be one of the 20% of Americans that do not need a budget, but I will tell you that the vast majority of people who are in this position, once had a budget. They did not end up in a great financial situation by chance.

It is very difficult, in this capitalist economy and hyper consumer culture that we live in to just stumble upon a life of controlled spending, no debt and significant savings. Most of us are not naturally that disciplined. It’s something that we had to work on with the feedback that a budget and tracking gives you.

The people that I know who are very successful financially but who do not have budgets, share several qualities. They think things through, they think about what they’re going to buy, they not only look for the best deal but they also consider the ongoing maintenance costs and if they want to assume those. They are not impulsive or compulsive buyers. They don’t buy something because they have to have something they see and like. They’re not emotional spenders either.

They’re not into regular retail therapy, maybe once in a while but it’s not their thing. And they are not driven by their egos. They don’t have an endless hole in them that is filled with stuff, or attempted to be filled with stuff because that never works, that ego or that hole in us can never be filled with stuff. Instead, these people are generally content, and while they may buy new things, they never over leverage themselves, they don’t go into debt for things.

That means that they don’t carry consumer debt like credit cards or personal loans. They may have other debt, but for the purpose of purchasing assets like real estate, equipment, software, intellectual property, and businesses that bring in income rather than just cost money. They know the difference between good debt and bad debt. And they don’t convince themselves that silly things are assets rather than liabilities.

They’re also not very influenced by the people around them to spend or to lend others money. They’re not living to impress others or keep up appearances with neighbors. One other quality or characteristic of a successful non-budgeter is that they’re easily able to delay gratification. They can say no right now so they can say yes to something better down the road.

And finally, successful non-budgeters do not get their dopamine hits from spending money; they get them from making money. So they have a natural focus on bringing in income more than they have on spending money, because that’s where their dopamine hits come from. Dopamine, as you probably already know, is a neurochemical that makes us feel good when it’s released in the brain. There are healthy and unhealthy ways to get a dopamine hit, but the quick and easy ways tend to be the unhealthy ones and the ones that people most easily slide into.

If you feel a burst of happiness, and I’m using air quotes because it’s not real happiness, when you shop and buy stuff, then you probably are getting a dopamine hit from shopping. It’s not a bad thing but if that becomes one of your main ways of getting the feel good chemical, then you’re going to create a strong habit of shopping, and that’s when spending can easily go out of control.

People without a strong dopamine response to buying stuff have better control over their spending and that’s why they can do just fine without a budget. They don’t need the guardrails that budgeting provides. So does that accurately describe you? If so, congrats, you’re one of the lucky few who doesn’t need a budget in order to keep their spending in check and to know that they are satisfied with where their money went.

So give me your honest assessment of yourself. Are you someone who needs a budget? Let me know in the comments, I’d love to know. I’ll see you in the next video.